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SEC Approves All 11 Spot Bitcoin ETF Applications

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SEC Approves All 11 Spot Bitcoin ETF Applications
  • The SEC has approved all 11 applications for spot Bitcoin ETFs, with trading set to begin on January 11.
  • Issuers and the crypto community have expressed optimism about the launch of these new products.
  • Experts have discussed the potential developments following this approval.

On the evening of January 10, the U.S. Securities and Exchange Commission (SEC) announced the approval of 11 applications for spot exchange-traded funds based on the first cryptocurrency.

The approved issuers include Bitwise, Grayscale, Hashdex, BlackRock, Valkyrie, BZX, Invesco, VanEck, WisdomTree, Fidelity, and Franklin Templeton. Trading is expected to commence on January 11.

Terminal with approved Bitcoin ETFs. Data: X.

“After thorough consideration, the Commission concluded that the proposals comply with the Exchange Act, as well as the rules and regulations applicable to a national securities exchange,” the document states.

Alongside the approval order, the SEC released a speech by Chairman Gary Gensler. He confirmed the agency’s decision but added a cautionary note about the risks involved.

According to the official, digital gold is primarily a “speculative, volatile asset that is also used for illegal activities, including ransomware, money laundering, sanctions evasion, and terrorism financing.”

“While today we approved the listing and trading of some spot Bitcoin ETP, we do not endorse and have not endorsed Bitcoin itself. Investors should remain cautious about the myriad risks associated with it and products whose value is tied to the asset,” he added.

The approval order pertains to Form 19b-4, but issuers require additional S-1 approval to launch on exchanges. The Commission is currently reviewing these documents, likely to meet the trading commencement date.

Reaction from Issuers and the Community

One applicant, Grayscale, has scheduled the start of trading for GBTC on NYSE Arca on January 11.

BlackRock also confirmed the approval of the iShares Bitcoin Trust (IBIT) for launch on Nasdaq.

“Through IBIT, investors will be able to access Bitcoin in a cost-effective and convenient manner,” said Dominic Roe, head of the firm’s U.S. division.

ARK Invest CEO Cathie Wood also scheduled the launch of the ARK 21Shares Bitcoin ETF (ARKB) for January 11. She stated that the company is already in talks with state pension funds and treasuries about investing in the first cryptocurrency.

Bitwise promised to donate 10% of the profits from the Bitwise Bitcoin ETF (BITB) to the development of the Bitcoin network, including projects like OpenSats and the Human Rights Foundation.

VanEck, even before the fund’s launch, allocated $10,000 to Bitcoin Core and committed to directing 5% of the profits from the VanEck Bitcoin Trust (HODL) to the organization over the next 10 years.

“We are not Bitcoin tourists. For seven years—since 2017—we have advocated for ETF approval and educated the market through breakfast seminars at our downtown office, research papers, and more. […] Thank you, Satoshi, for launching the most important financial freedom technology of the internet age,” stated the organization’s head, Jan van Eck.

Tron co-founder Justin Sun stated that the approval of Bitcoin ETFs in the U.S. demonstrates an “unstoppable crypto trend.”

“In the near future, Asian and Chinese markets will also seize this opportunity, and the first cryptocurrency will eventually reach 8 billion users worldwide,” he wrote.

SkyBridge Capital co-founder and managing partner Anthony Scaramucci told The Block that the approval of spot Bitcoin funds signifies the asset’s recognition as “legitimate.”

“We believe this approval will pave the way for broader adoption and recognition of the merits and utility of digital assets and blockchain-based infrastructure,” the entrepreneur added.

Cryptocurrency exchange Coinbase welcomed the regulator’s decision despite ongoing litigation.

“The SEC’s approval of 11 spot Bitcoin ETFs, with eight issuers partnering with Coinbase, marks a turning point for the expansion of the crypto economy. Products presented by the world’s largest asset managers will open diversified pools of new investors to drive long-term growth and innovation,” the company’s blog stated.

What Next?

In the 24-48 hours following the start of trading, all eyes will be on the anticipated inflow of funds into Bitcoin, according to TradeStation trading platform head Anthony Russo.

“Forecasts range from substantial to record-breaking, with some predicting an inflow of several billion dollars—an unprecedented feat in the ETF space,” the expert clarified.

Russo noted that financial institutions hold assets worth over $100 trillion, and a portion of these funds could be directed towards the first cryptocurrency. He also highlighted the ability of institutional players to “overcome regulatory hurdles” to incorporate the asset into their strategies.

Moody’s Investors Service Senior Vice President for Digital Assets Rajiv Bamra suggested that ETF approval could contribute to a more stable and liquid crypto market.

However, the sustainability of this positive trend “depends on the trajectory of global monetary policy” and the availability of cryptocurrency to institutional investors through appropriate instruments.

“Such increased interest and legitimacy are likely to spark a wave of innovation, attracting more talent and capital to the industry,” stated Tether CEO Paolo Ardoino.

Nate Geraci, president of consultant The ETF Store, speculated that after the initial excitement around spot Bitcoin ETFs subsides, the market will focus on Ethereum products.

Previously, BlackRock and Fidelity Investments filed applications for a spot exchange-traded fund based on the second-largest cryptocurrency by market capitalization.

“Combined with Grayscale’s court victory and the SEC’s approval of spot Bitcoin ETFs, the agency will now find it difficult to reject an ETH ETF without exposing itself to another lawsuit,” Geraci noted.

Volatility Shares co-founder Stuart Barton is also optimistic about Ethereum. In his view, the launch of futures-based funds on the asset is sufficient for spot approval.

Bitcoin itself reacted modestly to the ETF news, although the coin briefly rose above $47,000.

15-minute BTC/USDT chart on Binance exchange. Data: TradingView.

The asset currently maintains a positive trend, trading at $46,185. According to CoinGecko, its market capitalization has exceeded $900 billion.

Back in January, a day before the SEC’s official announcement, the regulator’s account was compromised. Hackers posted a fake news story about ETF approval, causing high market volatility.

The community criticized the Commission for negligence regarding cybersecurity. Ripple CEO Brad Garlinghouse advised the agency to investigate “itself.”

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